Wex reports strong first-quarter increases in revenue, net income

Corporate payment services provider Wex Inc. of South Portland reported a strong first quarter Thursday, with double-digit increases in both revenue and net income.

The company’s revenue for the quarter was $354.8 million, up 22 percent from $291.4 million in the first quarter of 2017. About $9 million of that increase was attributed to higher fuel prices, as one of Wex’s primary businesses is processing fuel payments for corporate vehicle fleets.

WEX CEO Melissa Smith

Excluding one-time credits and charges, the company’s net income for the first quarter was $48.6 million, or $1.12 per share, up 65 percent from $29.4 million, or 68 cents per share, a year earlier. When adjusted to include one-time credits and charges, the company’s net income for the quarter was $78.7 million, or $1.81 per share, up 47 percent from $52.9 million, or $1.23 per share, in the first quarter of 2017.

According to the investor website Seeking Alpha, Wex’s first-quarter revenue beat analyst projections by $14.8 million, and its adjusted net income beat projections by 8 cents per share.

In an interview Thursday, Wex President and CEO Melissa Smith said the company experienced strong revenue growth across all of its business units in the first quarter. Wex is a fast-growing company that provides payment-processing services for vehicle fleets, online travel services, and health care and employee benefits providers.

“Across the board, we had really strong organic revenue growth,” she said. “When you do that well, it typically drives profitability. That was kind of the foundation of the house, the fact that each of our lines of business brought in new revenue.”

Smith said the company has been investing in technology to make its products and services easier for customers to use, and it also has brought in experts on scalability to ensure Wex can keep up with its rapid growth rate.

“We’ve done a lot of work investing in the products and the technology,” she said, which has led to high customer retention rates as well as new contracts each time a Wex product is retooled and improved.

Factors contributing to Wex’s revenue and net income gains in the first quarter included an 8 percent increase from a year earlier in the number of vehicles serviced to roughly 11.5 million vehicles, and a 6 percent increase in the total number of fuel transactions processed to 131.8 million transactions, the company said. In addition, payment processing transactions increased by 7 percent to 109.8 million transactions.

Another favorable change for Wex was that the average U.S. retail fuel price increased by 16 percent to $2.78 per gallon from $2.40 per gallon in the first quarter of 2017. Wex receives a small percentage of each fuel payment it processes, so the company benefits from higher fuel prices. Still, the fuel price increase only accounted for about 15 percent of Wex’s revenue growth, said company Chief Financial Officer Roberto Simon.

“Even excluding the fuel prices, the quarter was extremely positive,” he said.

The company’s travel and corporate services unit experienced a 20 percent increase in purchase volume to $7.9 billion, up from $6.6 billion in the first quarter of 2017. Meanwhile, its health and employee benefits unit increased its average number of subscription software or “software as a service” accounts in the U.S. by 26 percent to 10.8 million accounts, up from 8.6 million accounts in the first quarter of 2017.

“We remain focused on our sustained ability to bring compelling new features and products to market, which is allowing us to continue to sign new customers, retain and grow our current base, and ultimately drive profitable growth,” Smith said.

Wex has about 1,000 employees in South Portland and about 3,300 worldwide. The company plans to relocate its headquarters to a 100,000-square-foot, four-story building near the Portland waterfront in early 2019, but has said it will continue to maintain a presence in South Portland.

Smith said the headquarters building, being built by developer Jonathan Cohen of 0 Hancock Street LLC, is coming along nicely and the company is excited about its upcoming move.

“I toured the new building earlier this week, hardhat in hand,” she said. “I love the location. I love it even more now that I was able to walk up the steps and look out, because you really get a sense of what Portland is – you’ve got the working waterfront kind of blended in with some of the more modern parts of Portland.”

Wex is a publicly held company that trades on the Nasdaq exchange under the symbol WEX. The value of Wex shares increased by 3.5 percent to $167.12 per share in trading Thursday.

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